13 November 2009

Cheapflights chairman gives industry a pep talk

The recession is an opportunity to improve your business, think strategy and take opportunities that wouldn’t normally occur.

These words of encouragement to the beleaguered travel industry were issued by Cheapflights executive chairman Hugo Burge on Thursday when he addressed a World Travel Market seminar on the future of the industry.

He told the audience: "People thought we were bonkers when we launched our US site just after 9/11 but this was the time to offer good value to buyers and there were less people talking to the airlines and the OTAs."

"Bad times can be good for lots of reasons. In good times, we found it harder to get good programmers because they were being lured away by the City. Now that is not a problem. The bad times focus you on pleasing your customers and your advertising partners, focusing on your product, thinking about your long term goals and strategizing on how to grow the business."

He said his company was not the only travel player to adopt this strategy. "Expedia reduced fees on bookings - something that Priceline pioneered - which has brought back consumers to them. They have lost less money than they thought with this business decision. TripAdvisor is spending $50m expanding into China which they predict will not make them any money in the next five to ten years but will be of value in the long term.

"Kayak has announced it will now run TV advertising and, famously, Ryanair’s Michael O’Leary is quoted as saying he loved recessions because that’s when he can buy planes cheaply."

He added: "The recession forces us to improve our product and delight our customers, just like Kellogg’s did. When it went through the Depression in the thirties, instead of acting like its main competitor at the time and cutting costs, it doubled its advertising budget, moved into radio advertising and added vitamins to its cereal. Its profits rose by 30%."

By Dinah Hatch